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Archive for the tag “compensation”

When a party dies during the pendency of a divorce matter, a question immediately arises: will the matter be resolved pursuant to the Divorce Code (i.e.: 23 Pa.C.S.A. Section 3323(d.1)) or the Probate Code (i.e.: 20 Pa.C.S.A. Section 6111.2)? While the statutes are fairly clear, there are times where a circumstance still needs to be sorted out by the court. Such a case arose in the Superior Court of Pennsylvania matter of In re Estate of Michael J. Easterday, Deceased, 171 A.3d 911 (2017).

In the Easterday matter, the decedent, Michael Easterday, passed from this life on Sept. 21, 2014, and was survived by his two sons, a daughter and his second wife. About a year before Easterday’s death (Aug. 13, 2013), the wife filed for divorce against Easterday. In or about December 2013, Easterday and the wife entered into a postnuptial agreement in which the parties agreed to waive any and all rights to the pension and retirement plan of the other, including any and all rights possibly available as a surviving spouse or beneficiary. The agreement also specifically states that it would remain in full force and effect without regard to future reconciliation, change in marital status, and entry of divorce decree absent a future written agreement.

In November 2013, the wife furnished Easterday with an affidavit of consent to divorce pursuant to 23 Pa.C.S.A. Section 3301(c). Not long after, Easterday executed the aforesaid affidavit and returned it to the wife. The wife, for an unknown reason, retained the aforesaid affidavit for approximately six weeks (until mid-January 2014) before providing it to her attorney for filing. Pursuant to Pennsylvania law, an affidavit of consent must be filed within 30 days of its execution (i.e., approximately December 2013). Later in January 2014 the wife proceeded with the divorce and filed for a final decree, but Easterday died before a decree was entered. A decree in divorce was ultimately never entered as Easterday’s affidavit of consent was stale.

Critically, at the time of Easterday’s passing, the wife remained the beneficiary of his pension and life insurance policy. Upon Easterday’s death, the wife immediately withdrew the divorce matter and collected on Easterday’s pension and life insurance policy.

In response to the wife’s petition with the court seeking to compel the wife to preserve and return the pension and insurance money she received. The estate contended that the postnuptial controlled the distribution of the aforesaid funds (specifically that the wife was not entitled to receive them) and Easterday’s designation of the wife as beneficiary of his insurance policy became ineffective pursuant to 20 Pa.C.S.A. Section 6111.2. In response, the wife argued that the postnuptial did not apply as the beneficiary designations were never changed, that 20 Pa.C.S.A. Section 6111.2 did not apply as the affidavit of consent was “stale,” that the parties were reconciling at the time of his death, and because of those reasons, Easterday intended that the wife remain his beneficiary.

After a hearing, the trial court ruled that the estate was entitled to Easterday’s pension, as it was addressed in the postnuptial, while the wife could retain the life insurance proceeds as they were not addressed in the postnuptial. Both parties filed exceptions, which were unsuccessful, leading to appeals by both parties to Superior Court which issued the decision described herein.

23 Pa.C.S.A. Section 3323(g), which is part of the Divorce Code, states: “(g) Grounds established . . . (2) In the case of an action for divorce under section 3301(c), both parties have filed affidavits of consent or, if the presumption in section 3301(c)(2) is established, one party has filed an affidavit of consent … (3) In the case of an action for divorce under section 3301(d), an affidavit has been filed and no counter-affidavit has been filed or, if a counter-affidavit has been filed denying the affidavit’s averments, the court determines that the marriage is irretrievably broken and the parties have lived separate and apart for at least one year at the time of the filing of the affidavit.” In the Probate Code, 20 Pa.C.S.A. Section 6111.2(a)(3)(ii) states “this section is applicable if an individual … dies during the course of divorce proceedings, no decree of divorce has been entered pursuant to 23 Pa.C.S. Section 3323 (relating to decree of court) and grounds have been established as provided in 23 Pa.C.S. Section 3323(g).” When evaluating the applicable law mentioned above, the court raised Pa.R.C.P. 1920.17 as also applicable herein. Rule 1920.17 prohibits the withdrawal of a divorce (and its economic claims) if divorce grounds have been established and the Estate does not the consent. While the aforesaid Rule directly applies to 23 Pa.C.S. Section 3323, the court opined that the Rule should also apply to 20 Pa.C.S.A. Section 6111.2(a)(3)(ii) as it would be inappropriate to allow a surviving spouse the power to negate 20 Pa.C.S.A. Section 6111.2(a)(3)(ii) by simply discontinuing the divorce action unilaterally.

In reviewing the underlying facts of this matter, the court took note of the fact that the affidavit of consent was not filed within thirty days of its execution. As a result, the lower court determined that divorce grounds were never established. Although the Estate argued that the lateness of the affidavit does not negate what it argued was an intent to consent to the divorce, the court, relying on public policy considerations, ruled that a strict compliance with the Divorce Code is required. In the court’s view, the integrity of the family is to be protected and the seriousness of the dissolution of marriage warrants strict compliance with the deadlines and requirements laid out in the statute. Indeed, the court pointed out, the establishment of divorce grounds takes on an added significance when, not only is the dissolution of a marriage at issue, but, in this case, it would also determine whether the Divorce Code or the Probate Code applies. Furthermore, the court observed that Easterday had an extended opportunity of several months to rectify the “stale” affidavit before his passing, but chose not to do so. Based on the above, the court ruled that a “stale” affidavit of consent is insufficient to establish divorce grounds, especially in a matter where it is, in its estimation, far from clear that the decedent possessed an intent to divorce at the time of his death. As a result, the Probate Code controls this case.

Ultimately, the court, applying 20 Pa.C.S.A. Section 6111.2, ruled that Easterday’s beneficiary designation on his life insurance is, therefore, valid, and the wife may retain the proceeds from the same.

In opposition to the estate’s arguments, the wife asserted that Easterday made a deliberate and conscious choice to give his pension to her through an irrevocable election that she be his beneficiary. Of course, the above is in direct conflict with the postnuptial, which, by its terms described above, definitively prohibits the wife from being such a beneficiary. The estate pointed out that the postnuptial was executed after the beneficiary election was made.

In reviewing the above, the court first noted that spouses may waive their right to the pension of the other if the waiver is specific. In its estimation, the postnuptial in the instant matter was clear and unambiguous, therefore its terms, namely that the wife waived her right to Easterday’s pension without regard to reconciliation, which could only be changed by a subsequent signed agreement, applies hereto.

Perhaps the most significant legal challenge to the postnuptial was the requirements of the Employment Retirement Income Security Act (ERISA). Pursuant to ERISA, a pension must be administered, and the proceeds therefrom distributed, according to the terms of the plan documents, and not alternative agreements, such as a postnuptial agreement. While acknowledging the applicability of ERISA to the pension in this matter, the court also indicated that, although ERISA may require the pension to be distributed to wife, the terms of the postnuptial can also apply by requiring Wife to turn over to the estate any and all sums she receives as a pension beneficiary.

In the end, the court entered a Solomonic decision to cut the pension “baby” in half: the wife can keep the life insurance policy proceeds while the estate is to receive from the wife the pension proceeds she received.

Originally published on December 26, 2017 in The Legal Intelligencer and can be found here.

Over the course of my career, I have written extensively on a wide variety of unemployment compensation law issues and legal principles. These writings have been published in The Legal Intelligencer, Upon Further Review, and The Pennsylvania Family Lawyer as well as posted onto my blog. I have collected these articles and blog posts and have listed them below. Thanks for reading!

Over the course of my career, I have written extensively on a wide variety of family law issues and legal principles. These writings have been published in The Legal Intelligencer, Upon Further Review, and The Pennsylvania Family Lawyer as well as posted onto my blog. I have collected these articles and blog posts and have listed them below. Thanks for reading!

Nathan Rudolph, my friend and fellow parishioner at St. John the Evangelist Anglican Church, has started a comic strip which I have greatly enjoyed and appreciated. With his permission, I will repost them here after he posts them. I think my readers will appreciate them as much as I do as they are rather insightful with a snarky edge. Enjoy!

In the recent matter of City of Philadelphia v. F.A. Realty Investors Corp., 95 A.3d 377 (Pa.Cmwlth.2014), the Court had the opportunity to tackle a matter of first impression when interpreting 53 P.S. Section 7293 with regard to when a property owner may redeem his property after a sheriff’s sale.

In F.A., the piece of real estate at issue (“the Property”) was subject to a tax delinquency which led to an order by the trial court to sell the Property at a sheriff’s sale in order to satisfy the aforesaid tax delinquency. Not long after the order was entered, the Property was sold at sheriff’s sale. Immediately after the sale, Defendant filed to redeem the Property, but its petition to do so was dismissed by the trial court.

According to 53 P.S. 7293, a property owner may redeem a property sold at sheriff’s sale “at any time within nine months from the date of the acknowledgment of the sheriff’s deed therefore, upon payment of the amount bid at such sale.” The City of Philadelphia argued that Defendant’s immediate action to redeem the Property was premature as it acted prior to the acknowledgment of the deed. The trial court agreed with the City’s interpretation and application of the statute when it dismissed Defendant’s petition.

When interpreting the statute cited above, the Court first noted that, per 1 Pa.C.S. Sections 1921 and 1922, and the cases decided thereunder, statutory construction ought not lead to an absurd result, and when there is ambiguity in the language of a statute, the court may look to the intent of the legislature to help provide interpretive guidance. The Court also explained that the redemption statute is to be liberally construed in order to effect justice, pointing out that the purpose of sheriffs’ sales is not to strip a property owner of his real estate, but simply to collect on municipal claims.

Defendant argued that making them wait until the sheriff’s deed is acknowledged would likely, and unjustly, lead to unnecessary additional fees, costs, taxes, and/or interest and, therefore, its prompt action could avoid these costs.

The Court observed that the applicable statute has at least two interpretations. The first being that the phrase “at any time” literally means at any time, without regard to when the acknowledgment occurs, as long as it is within the nine month time frame. The second interpretation begins the nine month period for redemption at the time of acknowledgment.

As the language is, in the Court’s view, ambiguous, it looked to legislative intent and, on that basis concluded that the legislature would not try and increase a property owner’s difficulty to redeem property. Indeed, a property owner may retain possession of a house sold at sheriff’s sale until the sale is completed by the acknowledgment and delivery of the deed obtained at the sale. As a result, the Court believed it would be an absurd result to disallow a property owner from redeeming his property while he is in possession of it simply because the deed had technically not been acknowledged.

Finally, Pennsylvania law prohibits the redemption of a vacant property after the date of acknowledgment. In light of the above, namely that absurd results are to be avoided and that the purpose of sheriffs’ sales is not to strip someone of his property but merely to ensure municipal claims are satisfied, it would seem that the City of Philadelphia’s arguments would disallow someone from redeeming a vacant property at all. In other words, if a property is vacant, an owner cannot redeem it after acknowledgment and, if the City’s interpretation of 53 P.S. 7293 is correct, he would not be able to redeem it before either, and this would be an absurd result, not to mention an unjust one, preventing an owner from redeeming his property.

So, in sum, in light of the above, and after review of the applicable statutes, the Court ruled that a property owner can redeem his property sold at sheriff’s sale at any time up to nine months after acknowledgment of the sale.

Originally published in Upon Further Review on June 7, 2017 and can be found here.

Nathan Rudolph, my friend and fellow parishioner at St. John the Evangelist Anglican Church, has started a comic strip which I have greatly enjoyed and appreciated. With his permission, I will repost them here after he posts them. I think my readers will appreciate them as much as I do as they are rather insightful with a snarky edge. Enjoy!

This article is part of my posts on the economic system of distributism. This is from practicaldistributism.blogspot.com which you can find here:

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Thomas Storck’s recent article about the antagonistic relationship between owners and workers prevalent in capitalist enterprises included the following statement. “The activity of the Mondragon cooperatives in Spain proves that there is no reason why large-scale and highly technical industrial operations cannot be worker owned.” This sentence prompted a reader to respond with a request.

“Please provide a follow up article showing how this system works for Mondragon, their profit, employee take home, growth, etc…”

This response to that request will address two things. I will first provide the information requested, then I will address the case of Mondragon and how it does, and does not, relate to distributism.

Mondragon started as a technical college, founded by Father José María Arizmendiarrieta in 1943. Its first cooperative was established with 5 workers making paraffin heaters in 1955. Today, Mondragon is a cooperative federation comprised of over 250 companies and 74,000 workers operating in the finance, industrial, retail and knowledge sectors. Mondragon’s sales in 2014 were €10,985 million (US $12.48 billion). They put €145 million (US $164 million) in research and invested €345 million (US $392 million). They have 15 technology centers, 1,676 researchers and have filed 479 patent families.

I don’t have specific information on employee take-home, but each company agrees to set its own wage ratio within an agreed upon range of 3:1 to 9:1. The average is 5:1, meaning that the highest paid person in a given company typically makes no more than five times what the lowest paid person in the same company does. The result of this is that the workers doing non-management jobs at Mondragon typically make 13% more than similar local jobs outside of its structure. Most workers make well above the minimum wage since they are employed in jobs requiring high levels of skill and technical training, Mondragon’s managers do earn less than those outside of its structure, but this is because they agree that Mondragon’s model is better than the typical corporate model.

Only 103 of Mondragon’s 260 companies are cooperatives. This in itself does not make it incompatible with distributism. I don’t have any details about the other 157 companies, like whether they are small, independently owned businesses. The ideal of distributism is that everyone own the capital used to earn his living, but we accept that this ideal may never be fully achieved. Some people may just prefer prefer to be employees, or may have to work as employees for some time before they can become owners. Distributism does not require that every shop be a worker owned cooperative, but those that are not would tend to be small local shops, and I don’t know the extent to which this is the case for those Mondragon companies that are not cooperatives.

The original cooperative established with five members back in 1955 grew to become Fagor Electrodomestics, the largest company in Mondragon’s federation. The Fagor brand is currently present in 100 countries, employs more than 12,000 people in 17 countries and operates 16 factories in 3 continents. Due to mismanagement, it had to declare bankruptcy in October 2013. The economic articles from capitalist pundits seemed to hardly contain their glee at what they perceived as the fall of the greatest example that methods other than their own could work. The Economist declared that “one of the group’s key principles—of solidarity among its 110 constituent co-ops—has found its limit.” Actually, what had reached its limit was the federation’s willingness to extend another loan to prop up Fagor when it had no plans which would resolve its problems.

Before crowing so loudly, capitalist economists should have waited to see the reality of this commitment and how it compares to what happens when the typical capitalist enterprise goes bankrupt. The reality of Mondragon’s commitment to worker solidarity is revealed by what the federation actually did regarding the workers of Fagor. Mondragon’s social mutual, Lagun Aro, proposed a 1.5% raise in contributions from all members at the next General Assembly so it could provide needed unemployment benefits to displaced Fagor worker-owners. They received 80 percent of their salary while Mondragon identified new positions for these workers. Compare this to the layoffs we’ve all seen reported when large capitalist employers go bankrupt or have to restructure to avoid bankruptcy.

This clearly shows the dynamic vibrancy and resilience of the cooperative model even when operating with large-scale, multi-national, highly technical industrial operations. This is why various cooperative organizations, the p2p economic movement and distributists all can validly point to Mondragon as an example of how well the cooperative model truly works.

When it comes to distributism, however, my opinion is that we need to be more carefully nuanced when using Mondragon as an example. It has grown to a size and scale of operation beyond that which distributists actually promote and which goes against the preference for local or even regional economics to the international model touted today. We are not in any way against international trade, but individual corporations employing thousands in multiple countries seems to me to go against our economic model, and Fagor is an example of why. The description of how Mondragon handled the bankruptcy of Fagor should not be taken as a claim that it wasn’t an issue for the federation. The mismanagement of Fagor not only impacted its thousands of employees, but the entire Mondragon organization. The fact that it was able to come up with a solution that maintained its commitment to worker solidarity does not mean that this was an easy solution or that it did not put significant strain on the people or the finances of Mondragon as a whole.

In the past, Fagor might have been held by some to be the shining example of Mondragon’s success because it was the largest company with the most employees, but that is looking at the organization from a strictly capitalist perspective. What happened in the wake of Fagor’s bankruptcy shows that the many smaller cooperatives and the overall commitment to worker solidarity are the mark of Mondragon’s success. They helped to support Fagor with the loans it received before the final straw that resulted in its bankruptcy. They supported the workers displaced when Fagor failed. Democratically based worker solidarity is at the very heart of the cooperative movement, and also at the very heart of the guild structure distributists promote.

It is clear that the cooperative model works and this is why distributists propose this model for large scale operations, particularly those which only make sense at a more regional rather than local level. Of course, cooperatives also work at a local level and we promote that as well.

Nathan Rudolph, my friend and fellow parishioner at St. John the Evangelist Anglican Church, has started a comic strip which I have greatly enjoyed and appreciated. With his permission, I will repost them here after he posts them. I think my readers will appreciate them as much as I do as they are rather insightful with a snarky edge. Enjoy!

My firm, the Law Office of Faye Riva Cohen, P.C., represents the Plaintiff in the case captioned as Ali v. McClinton, (ED PA, June 14, 2017). The Ali case has been featured in an article entitled “Fired Legislative Staffer Can Move Ahead With Suit Alleging Use of State Funds to Promote Church Facility,” by Religion Clause on June 15, 2017, which can be found here. You can also read it below:

“In Ali v. McClinton, (ED PA, June 14, 2017), a Pennsylvania federal district court refused to dismiss on 11th Amendment grounds a suit against a member of the Pennsylvania House of Representatives in her personal capacity. The court permitted fired constituent services staffer El Shafiyq Asad Ali to move ahead on his 1st Amendment Establishment Clause claim and one of his Pennsylvania Whistleblower Law claims. Ali alleges that Rep. Joanna McClinton fired him after he objected to McClinton’s asking him to organize an event, to be paid for from state funds, at a Philadelphia Housing Authority site. The event was designed to promote a nearby facility that the Open Door Mission True Light Church planned to open. Rep. McClinton is a minister at the Church. The court however did dismiss Ali’s religious discrimination claims, certain of his Whistleblower Act claims and all of his “official capacity” claims against McClinton and the Pennsylvania House of Representatives.”